The company discontinued using a small four-year-old building that has housed one part of a production process. Since the building is on Delphinas property, among the companys other buildings, it is not feasible to sell the building or to rent it to an outside organization. However, it is quite possible that Delphina will find a use for it in some future year. The building originally cost $3,000,000 to construct and is being depreciated on a straight-line basis over 20 years.

Explain fully how this modernization and reorganization event should be accounted for by Delphina. To the extent possible, specify the numerical effect on Delphinas income statement and SFP for 2020 and address the managers worries that the bank may reduce the line of credit.